Enforcement of Property Rights in a Barter Economy
Journal
Social Choice & Welfare
ISSN
0176-1714
Type
journal article
Date Issued
2010
Author(s)
Abstract (De)
If property rights to consumption goods are insecure, the incentives to trade in a barter economy are reshaped. In a pure exchange economy, we examine the case where two contestable consumption goods are vital to two agents and initial endowments follow a binary distribution. In line with the existing literature, we examine in a two-stage game how the equilibrium security of claims to property is determined. We find that, depending on the exogenous preference and appropriation-effectiveness parameters, two different regimes emerge in equilibrium: trade and appropriation, and peaceful coexistence, with the latter regime exhibiting efficiency with respect to the goods traded. However, inefficiencies arise due to the investment in defensive activities necessary to deter appropriation. Thus, we have found an endogenously determined measure for the transaction cost underlying a market which replicates the outcome of a Walrasian market.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
None
Refereed
Yes
Publisher
Springer
Volume
34
Number
2
Start page
249
End page
263
Pages
15
Subject(s)
Eprints ID
259465